Top Causes of Business Disputes
Posted On January 17, 2017 by Murphy Law Group in Business Law
Dan Murphy of the Massachusetts based Murphy Law Group discusses the top causes of business disputes, how business partnerships end, and how an attorney or mediator can end a business dispute amicably rather than in litigation.
John Maher: Hi, I’m John Maher. I’m here today with Dan Murphy of the Murphy Law Group in North Andover and Boston, Massachusetts. Today, we’re talking about causes of business disputes. Welcome, Dan.
Dan Murphy: Thanks for having me, John.
Major Causes of Business Disputes
John: Sure. So Dan, what are the causes of most business disputes?
Dan: Simply put, generally, something’s gone wrong in the eyes of one of the parties. That’s very much a general answer, but generally that is the way in which business disputes arise. One party is disappointed in the behavior or the delivery of services, or products by the other party.
John: Okay, and how can business disputes like that be avoided?
Dan: Business to business, it’s important that from the outset expectations are drawn. And expectations need to be laid out, whether they be in a formal contract or certainly in writings between the parties that may ultimately be interpreted as a contract.
It’s important for both parties to establish what their expectations are of the other party, and for each to communicate what their expectations are and to make sure that there’s an understanding on both sides what the expectations are.
Having a Business Dispute Without Going to Court
John: Other than just having a well written contract, is there a way that you can avoid going to a trial?
Dan: Right, I mean business disputes, typically when you’re dealing with two parties that at one point in time felt as though it was to each of their respective advantages to enter into a relationship, or into a contract with the [other] party, that means that there’s something that they have in common that you ought to try to get back to in order to resolve the dispute rather than allow it to continue and to simply do harm both parties.
Most business disputes, where you have responsible businesses who initially decided to engage in business with each other and if they’ve got responsible council as well, can be resolved without going through a lengthy litigation.
John: And what’s the process of doing that?
Dan: It’s difficult to pigeonhole any particular business dispute, because they’re all different, and the response is different. Sometimes you don’t have responsible parties on both sides. Sometimes you have one party that has just said that they’re going to refuse to perform according to the contract, and the party that has been hurt by that has no other way to pursue it than to file suit. That is an extreme situation where litigation will take its course and ultimately a judge or jury will resolve the case.
On the other hand, if both parties think that they are acting reasonably and acting according to what the expectations were that were drawn out initially, whether it be in a written contract or otherwise, then there’s probably a gray area that needs to be worked through between the parties. Oftentimes, counsel can do that and if you need to bring in a third party then mediation is appropriate. Bringing a third party in with fresh eyes who can listen to each side, and each side give their respective views on what occurred, having a mediator weigh in on it, and pushing each side toward resolution is often an effective way of resolving a business dispute.
Business Disputes and Meditation
John: Is a mediator’s role in that case to do what you said, which is to try to get both parties to remember their reasons for having this contract or this agreement to begin with? They had some reason to work together at the beginning of their relationship, and does the mediator just try to get them back to that place where they can come to an agreement again?
Dan: The beauty of mediation is that a mediator can either take that tact or take a tact of saying, “Okay, how do we now efficiently disengage? So the two of you can’t move forward to do what you initially wanted to do because of one factor or another. One party feels aggrieved. How do we recognize that that party has been aggrieved? And if that party has been aggrieved, how can we compensate that party and how can we stop the damage from continuing, and potentially how do we simply disengage and have, if you will, a business divorce?
John: Are there any other ways that a business dispute should be handled, especially if it’s already in progress and you’re just coming into the middle of it?
Dan: Well, I can tell you that I’ve been in front of a number of judges for business disputes, and one of the best judges I ever was in front of was a federal judge who pulled the parties together and said basically that — on the eve of trial, listened to what the respective views of each of the parties were and said, “Shame on both of you because you’re now going to throw this into the hands of me or, if it wasn’t me, to a jury when you had the ability to control the outcome from the time you commenced this litigation until now. Instead, each of you have spent a considerable amount of money to get here. Neither of you are sure of what the outcome will be and one of you will clearly be very disappointed in the outcome, only to have the other very disappointed when the party that loses files an appeal, and we realize that the case still hasn’t come to an end.”
John: Right. It’s just going to drag on for years.
Dan: Drag on for years, take on a life of itself, and is not healthy for either of the businesses.
John: All right. That’s really great information, Dan. Thanks again for speaking with me today.
Dan: Thank you, John.
John: And for information about the Murphy Law Group, visit the firm’s website at www.mlgllc.com, or call 978-686-3200.